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Saying Florida has a competitive insurance market, the Obama administration has denied the state’s request to let it put off tough new Affordable Care Act rules that limit what insurers can spend on overhead and administration.

Under the health overhaul, beginning this year, insurers are required to spend at least 80 percent of their customers’ premium dollars on actual medical care, as opposed to salaries, overhead or broker’s commissions. Today’s decision means consumers whose companies overcharge them will receive rebates by Aug. 1.

Based on 2010 data, Florida insurers would have had to return $100 million to customers, said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services.

But he said companies have lowered premiums to avoid having to pay rebates in 2012, and so once the 2011 data is tallied, the total amount that must be returned will be smaller.

Larsen called the spending rules “one of the most important consumer protection provisions” in the Patient Protection and Affordable Care Act.

“It helps ensure that consumers get value for their premium dollars,” Larsen said.

Under the health overhaul, states could ask the federal government to allow them an exemption. They would have to prove their state’s insurance market would be disrupted to the point that insurers would leave the market, however.

Larsen said there’s no evidence that insurers are leaving Florida because of the spending rules.

Eighteen states have asked for such an exemption, including Florida, he said. So far, four other states have received denials, more have received approvals, and several are still pending.

“The test is, essentially, is it likely that one or more insurance companies would withdraw from the market,” Larsen said. “The state of Florida has a very competitive individual market, and we did conclude that applying the 80-20 rule in Florida would not reduce the availability of individual insurance.”

The so-called “medical loss ratio” requirement was designed to curb lavish salaries and administrative spending by insurers, and guarantee that consumers buying insurance received the coverage they were promised. One in five U.S. insurance customers were getting less than 70 cents worth of care for every $1 they spent on insurance before 2011, the administration said.

In March, Florida’s insurance commissioner, Kevin McCarty told the administration that its policy would hurt Floridians, and could threaten the viability of the insurance brokerage profession. He asked for permission to hold insurers to weaker requirements until 2014 -68 cents, 72 cents, and 76 cents on the dollar for 2011, 2012, and 2013, respectively.

Delaying the higher requirement in that way would give the marketplace time to adjust, he said.

McCarty said he had held two public hearings on the topic, and based on testimony, he concluded that raising Florida’s medical spending requirement to 80 cents on the dollar from its current 65 cent requirement (70 cents for HMOs) would cause some customers to lose coverage.

Insurance brokers would no longer have a way to be paid. And new insurance companies, which have higher start-up costs, would be unable to launch, he said.

“There is simply no way to build a growing company on that amount of money,” McCarty wrote.

Additional paperwork showed that out of 22 insurers in the state, 11 would have to issue rebates if they were required to spend more than 76 cents on the dollar on medical care, while only four would have to issue rebates if the requirement was 68 cents on the dollar.

But Larsen said insurers are already adjusting, and one that threatened to leave the state at the time of McCarty’s hearings is not actually doing so.

The agency received a petition signed by more than 3,000 people asking that the spending rules be kept in place. Today’s decsion affects private insurers in the individual insurance policy market.

Blue Cross and Blue Shield of Florida, which has about 45 percent of that market share, would have to pay back about $8 million to its customers based on 2010 figures. The 2011 figures aren’t in yet, and so the actual amount will be different. Golden Rule, the second largest insurer in the Florida individual market, would have to pay back about $36.8 million under the 2010 figures.

In a statement, a spokesman for Florida’s Office of Insurance Regulation expressed disappointment:

The Office is disappointed that the Department of Health and Human Services’ (HHS) has denied Florida’s application for an adjustment to the Medical Loss Ratio (MLR) for the individual health market. The Office believes the evidence obtained during the two public evidentiary hearings in 2010 supports the assertion that an immediate imposition of the MLR ratio will destabilize the individual market in Florida. The Office will not comment further until it has had time to review and evaluate HHS’ letter.